AMENDMENT NO. 3 – LOAN AND SECURITY AGREEMENT
AMENDMENT
NO. 3 –
Amendment
No. 3, dated August 20, effective as of August 7, 2008 (“Amendment”), to
the Loan and Security Agreement, dated August 7, 2007, as amended as
of January 30, 2008 by Amendment No. 1 and as further amended as of March 18,
2008 by Amendment No. 2 (collectively, the “Original Agreement” and, as
amended hereby, the “Agreement”), by and between
EMAGIN CORPORATION, a
Delaware corporation with its principal place of business located at 00000 X.X.
0xx
Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxxxxxx 00000 (the "Borrower"), and MORIAH CAPITAL, L.P., a
Delaware limited partnership with offices at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (as further defined below, the "Lender"). Capitalized terms
used but not defined herein have the meanings given to them in the Original
Agreement.
R E C I T A L
S:
A. Borrower
has requested that Lender extend the Maturity Date, increase Maximum Credit,
consent to certain changes in the Borrowing Base and consent to the other
changes set forth herein.
B. Lender
has agreed to accommodate Borrower’s requests on the terms, and subject to the
satisfaction of the conditions, set forth herein.
The
parties agree as follows:
SECTION
1. AMENDMENTS
Section
1.1 Amendment to Section 1.9 of Original
Agreement. Section 1.9 of the Original Agreement (“Borrowing Base”) is hereby
amended and restated in its entirety as follows:
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“1.9
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“Borrowing Base” shall be
calculated at any time as the sum of (i) the product obtained by
multiplying the outstanding amount of Eligible Accounts, other than
Eligible Foreign Accounts, net of all taxes, discounts, allowances and
credits given or claimed, by ninety percent (90%), plus (ii) the
product obtained by multiplying the outstanding amount of Eligible Foreign
Accounts, net of all taxes, discounts, allowances and credits given or
claimed, by eighty percent (80%), plus (iii) the lesser of (A) Eight
Hundred Thousand Dollars ($800,000) or (B) the product(s) obtained by
multiplying seventy percent (70%) by the values of Eligible Inventory as
determined by Lender in good faith in its reasonably commercial judgment,
based on the lower of cost or
market.”
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Section
1.2 Amended and Restated Revolving Loan
Note. References in the Original Agreement to the “Note” shall mean the Amended
and Restated Secured Convertible Revolving Loan Note, dated August 7, 2007, as
amended and restated as of August 7, 2008, in the form annexed hereto as Exhibit A (“Amended and Restated Revolving Loan
Note”).
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Section
1.3 Delivery
of Amended and Restated Revolving Loan Note. Contemporaneously herewith,
and as a condition to the effectiveness hereof, the Borrower is executing and
delivering to Lender the Amended and Restated Revolving Loan Note.
Section
1.4 Amendment
to Section 1.52 of Loan Agreement. Section 1.52 of
the Original Agreement is hereby amended and restated in its entirety as
follows:
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“1.52
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“Maturity Date” shall
mean August 7, 2009, or such earlier date by which the maturity of the
Obligations shall have been accelerated pursuant to the terms
hereof.”
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Section
1.5 Amendment
to Section 1.51 of Loan Agreement. Section 1.53
of the Original Agreement is hereby amended and restated in its
entirety as follows:
“1.53. "Maximum Credit" shall mean
the amount of Three Million Dollars ($3,000,000.00).”
Section
1.6 Issuance of August 2008
Warrant; Warrant Issuance Agreement.
(a) Contemporaneously
herewith, and as a condition to the effectiveness hereof, the Borrower is
executing and delivering to Lender a warrant to acquire up to 370,000 shares of
Common Stock at an initial exercise price of $1.30 per share, in the form
annexed hereto as Exhibit B (“August 2008
Warrant”).
(b) In
connection with the issuance of the August 2008 Warrant, contemporaneously
herewith, and as a condition to the effectiveness hereof, the parties are
entering into Warrant Issuance Agreement No. 2, in the form annexed hereto as
Exhibit C
(“Warrant Issuance Agreement
No. 2”).
Section
1.7 Share
Issuance. Within three (3)
Business Days of the execution of this Amendment, the Borrower shall
deliver to Lender a certificate for 125,000 shares of Common Stock (the “New Shares”).
Section
1.8 Amendment
to Registration Rights Agreement. The Registration Rights
Agreement is hereby amended to provide that the New Shares, the shares of Common
Stock underlying the August 2008 Warrant and the 2008 Shares (as defined in the
Amended and Restated Securities Issuance Agreement (defined below)) are
“Registrable Shares”, as defined in the Registration Rights Agreement, as
amended, in the form annexed hereto as Exhibit E (the “Amended Registration Rights
Agreement”).
Section
1.9 Amended
and Restated Securities Issuance Agreement. Contemporaneously herewith,
and as a condition to the effectiveness hereof, the parties are entering into
the Amended and Restated Securities Issuance Agreement in the form annexed
hereto as Exhibit
D (“Amended and Restated
Securities Issuance Agreement”).
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Section
1.10 Fees. Borrower shall pay to Moriah
Capital Management, L.P. the various fees described in the letter agreement to
be executed contemporaneously herewith. Such fees shall be deemed fully earned
on the scheduled payment date and shall not be subject to rebate or proration
for any reason.
Section 1.11 Financial
Covenants. The Original Agreement is hereby amended to add the
following new Section 9.19, to read in its entirety as follows:
“9.19 Financial
Covenants.
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(a)
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Quick Ratio.
Commencing August 31, 2008, Borrower shall maintain a ratio of (i) [cash
plus marketable securities plus accounts receivable] to (ii) current
liabilities of not less than 0.25:1 as of the last day of each
month.
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(b)
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Current Ratio.
Commencing August 31, 2008, Borrower shall maintain a ratio of current
assets to current liabilities of not less than 0.4:1.0 as of the last day
of each month.
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(c)
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Days Inventory
Outstanding. Commencing August 31, 2008, Borrower shall maintain
days inventory outstanding of no more than 120 days. The formula will
be calculated every 30 days in the following fashion: average inventory of
the Company for 30 days/quarterly cost of goods sold multiplied by 90
days as of the last day of each
month.”
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Section 1.12 Relationship
to Original Loan Documents. This Amendment is
an amendment of and supplement to (and not a novation of) the Original Agreement
and the other Loan Documents and the schedules thereto, without any discharge,
release or satisfaction of the Obligations (or any guaranty or collateral
security therefor), all of which Obligations and security remain outstanding
under the Loan Documents, as amended. Except as specifically modified
by this Amendment, the Original Agreement and other Loan Documents are and
continue to be in full force and effect (and without updating) as in effect
immediately prior to the date hereof.
Section 1.13 Loan
Documents. This Amendment,
the Amended and Restated Revolving Loan Note, the August 2008 Warrant, Warrant
Issuance Agreement No. 2, the Amended Registration Rights Agreement
and the Amended and Restated Securities Issuance Agreement are Loan Documents
executed pursuant to the Original Agreement and, unless otherwise expressly
indicated herein, are to be construed, administered and applied in accordance
with the provisions thereof.
Section 1.14 Borrower’s
Certifications. The effectiveness of this Amendment shall be subject to
Borrower’s satisfaction of, and compliance with, all of the following conditions
as of the date of this Amendment, as determined by
Lender (collectively, the “Amendment
Conditions”):
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(a) Representations and
Warranties. Each of the representations and warranties made by
or on behalf of Borrower to Lender in the Original Agreement or in other Loan
Documents (as amended hereby) are true and correct in all material respects as
of the date of the Amendment (provided that any such representation or warranty
that is qualified as to materiality shall be true and correct in all respects),
and Lender shall have received a certification from a Responsible Officer with
respect to the foregoing in form and substance satisfactory to
Lender.
(b) Performance,
etc. Other than with respect to any rights to registration of
Company common stock and any Event of Default arising out of the Company’s
failure to repay the Obligations under the Original Agreement on August 7, 2008,
which default has been waived by Lender, Borrower shall have duly and properly
performed, complied with and observed each of its covenants, agreements and
obligations contained in the Original Agreement and any of the Loan Documents to
which it is a party or by which it is bound (each as amended hereby), and Lender
shall have received a certification from a Responsible Officer with respect to
the foregoing in form and substance satisfactory to
Lender.
(c) No Default. Other than with
respect to any rights to registration of Company common stock and any Event of
Default arising out of the Company’s failure to repay the Obligations under the
Original Agreement on August 7, 2008, which default has been waived by Lender,
no event shall have occurred and be continuing as of the date hereof, and no
condition shall exist on the date hereof, which constitutes an Event of Default
or which would, with notice or the lapse of time, or both, constitute an Event
of Default under the Original Agreement or any of the Loan Documents, and Lender
shall have received a certification from a Responsible Officer with respect to
the foregoing in form and substance satisfactory to
Lender.
(d) Corporate
Authorizations. Borrower shall have delivered to Lender a
certification from a Responsible Officer in form and substance satisfactory to
Lender, together with certified resolutions of directors authorizing the
transactions contemplated hereby and an incumbency certificate setting forth the
executive officers and directors of Borrower, in each case in form
satisfactory to Lender.
(e) Fees and Expenses of Lender’s
Counsel. Borrower shall have paid the outstanding fees and
expenses of Lender’s counsel incurred in connection with the transactions
contemplated hereby or otherwise under the Agreement, which amount is currently
estimated to be $10,000.
Section 1.15 Release
of Lender. In consideration of Lender’s agreement to enter
into this Amendment and make additional advances to Borrower hereunder, Borrower
hereby releases and exculpates Lender, and Lender’s and Lender’s Affiliates’
officers, directors, partners, shareholders, members, employees, agents,
representatives and designees, from any liability arising from any acts under
the Original Agreement or in furtherance thereof, whether as attorney-in-fact or
otherwise, whether of omission or commission, and whether based upon any error
of judgment or mistake of law or fact. In no event will Lender have
any liability to Borrower for lost profits or other special or consequential
damages.
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SECTION
2. MISCELLANEOUS
Section 2.1 Prior
Agreements. This Amendment
shall completely and fully supersede all other and prior agreements and
correspondence (both written and oral) by and between Borrower and Lender
concerning the subject matter of this Amendment. Except as expressly
amended hereby, the Agreement shall remain in full force and
effect.
Section
2.2 Counterparts. This Amendment
may be executed in any number of counterparts, with the same effect as if all
the signatures on such counterparts appeared on one document. Each
such counterpart shall be deemed to be an original, but all such counterparts
together shall constitute one and the same instrument.
Section 2.3 Amendments. This
Amendment may not be amended, waived, modified, supplemented or terminated in
any manner whatsoever except by a written instrument signed by Borrower and
Lender.
Section
2.4 Binding
on Successors. This Amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns, except that Borrower may not assign any of its rights or
obligations under this Amendment or the other Loan Documents to any Person
without the prior written consent of Lender.
Section 2.5 Invalidity. Any
provision of this Amendment that may be determined by a court of competent
jurisdiction to be prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 2.6 Section
or Paragraph Headings. Section and paragraph headings used
herein are for convenience only and shall not be construed as part of this
Amendment.
Section 2.7 Governing
Law. This Amendment shall be construed in accordance with, and
shall be governed by, the laws of the State of New York, without giving effect
to provisions for choice of law thereunder other than Section 5-1401 of the New
York General Obligations Law.
[SIGNATURE PAGE
FOLLOWS]
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IN WITNESS WHEREOF, this
Amendment No. 3 has been duly executed as of the day and year first above
written.
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EMAGIN
CORPORATION
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By: /s/ Xxxxxx Xxxxxxx | |
| Xxxxxx Xxxxxxx | |||
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CEO
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| MORIAH CAPITAL L.P. | |||
| By: Moriah Capital Management, L.P., General Partner | |||
| By: Moriah Capital Management, GP, LLC, General Partner | |||
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By:
/s/ Xxxx Xxxxxxxxxxx
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| Xxxx Xxxxxxxxxxx | |||
| Managing Partner | |||
[SIGNATURE
PAGE – AMENDMENT NO. 3 – LOAN AGREEMENT]
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EXHIBIT
A
AMENDED
AND RESTATED REVOLVING LOAN NOTE
[ATTACHED]
EXHIBIT
B
AUGUST
2008 WARRANT
[ATTACHED]
EXHIBIT
C
WARRANT
ISSUANCE AGREEMENT
[ATTACHED]
EXHIBIT
D
AMENDED
AND RESTATED SECURITIES ISSUANCE AGREEMENT
[ATTACHED]
EXHIBIT
E
AMENDED
REGISTRATION RIGHTS AGREEMENT
[ATTACHED]
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